Will Social Security Be Around for Your Whole Retirement?

9.15.23: Audio automatically transcribed by Sonix

9.15.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every single week. And today is no exception. We are absolutely bringing it again. Today on today's show, we're going to discuss mastering Social Security and will include some strategies for managing your emotions, helping you become a much wiser investor. As always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today, brother? I'm doing good, Mike.

Producer:
You know you do you mean to say that, you know, being a complete and total basket case when it comes to my investing for my future, that that's not the best plan.

Mike Zaino:
That is definitely a frowned upon in this establishment.

Producer:
We don't go for that kind of stuff around here. I got to tell you, you little, little whippersnapper. Well, no good. I'm good, Mike. So we'll get into that discussion coming up here a little bit later on. But it should be a good one because I think a lot of people do that. It's a common thing because we're people. We're human beings. We have emotions and and they sometimes get in the way of what could be a very successful financial future. And yeah, I mean, keeping those emotions in check definitely a very, very important thing. And that just one of the many things that we'll discuss today. We've got, as you said, some Social Security talk to to be had actually quite a bit of it. We're bringing back one of our favorite segments. Right or wrong, we haven't done it in a while. And yeah, it's been it's been a minute. The listeners out there, you can play along with us and kind of test your financial IQ a little bit. And we also, of course, as always, Mike, at the beginning of the show, want to give a special shout out to all of the listeners there in the Greater Charlotte area, like right around Fort Mill where you are, whether it be on the North Carolina side, on the South Carolina side, wherever you're listening, whichever one of the Carolinas you're in, we're glad that you're in with us today here on the show and also on the website. You can be in Cucamonga for crying out loud and be listening to us on the website or on the podcast. When's the last time you heard somebody reference Cucamonga?

Mike Zaino:
Mike Not unless it was, you know, tied with Rancho Cucamonga. That's, you know, Cucamonga by itself. Don't even know. I was about to say, Where is that? Yeah, I don't know.

Producer:
I probably probably just made it up. I have no idea. Um, I think maybe I heard it on the Looney Tunes or something when I was a kid. But anyway, but that was a left turn at Albuquerque, I think. Was the was the Bugs Bunny saying there. But we do have the podcast and it is up on not only the website, but it is on the chat, all the podcast channels out there Apple, Spotify, iHeart, all the big ones. Wherever you listen to podcasts, you can find us. Just go there. Search for Money Matters with Mike. Same deal on YouTube. A lot of great highlights from the show. Some special content as well. The Facebook page always a hit and know that you really love interacting with the Facebook fans there.

Mike Zaino:
Mike I do. Just because it's it's probably the fastest way to interact for you know, with me directly. People ask questions, they make comments. I reply to the comments. They can message me on the Facebook page. And so it's it's it's awesome because we get a lot of our content from our listeners who, you know, call in and say, Hey, I'd like to hear about this or I'd like to hear about that. So if you're out there listening and you're thinking, I'd really like to learn more about X, then let us know and we'll be sure to, you know, have it as a topic on one of our shows.

Producer:
Yeah, and just search. Once again, Money matters with Mike on the on the Facebook there and you can do it on the app of course, or on line on your web browser, whichever way you prefer. And don't hesitate to give Mike a call with any of your questions because, hey, you got questions. Mike Zaino's got answers for you. 704 56015737045601573. Also the number to call for a free report on tax free investments for a better retirement. Mike. Nobody likes paying taxes. So when we say tax free. Boy, that's gotta be music to the ears of so many.

Mike Zaino:
It should definitely help people's ears perk up for sure.

Producer:
It definitely And we'll help educate you through that report about ways to keep more of your hard earned money. And it's going to provide you with some additional detailed info, as well as some tips for getting started. Once again, you can go to MoneyMattersWithMike.com to request that we're going to kick things off with our Quote of the week momentarily. Mike, We of course have that edition of Right or Wrong where we'll talk about Social Security. That's coming up. Emotional investing, that discussion. Also ahead, our cost cutter of the week is a very interesting one and I think a very good, practical, useful one for people this time around. It's some bad banking habits that are probably costing you more than you think. And we've got several of those, which I think will probably be very, very interesting to the listeners. And of course, this week in history to round things out as we close out the show about, don't know, 50 some odd minutes from now here. All right let's do get things kicked off with our ever popular ever famous and much anticipated quote of the week.

Producer:
And now wholesome financial wisdom. It's time for the Quote of the Week.

Producer:
Well, the quote this time around comes from somebody you may have heard of before, Thomas Edison and, of course, an American inventor and businessman credited with more than 1000 inventions and patents, including the good old incandescent light bulb. He said, Let there be light. And there was. And he also said this Many of life's failures are people who did not realize how close they were to success when they gave up. And you look, Mike, at somebody who invented so many things, who was such a success in so many different arenas. I bet he felt like giving up quite a bit every now and then. But you got to push through that. You got to keep going and eventually you'll succeed.

Mike Zaino:
You know that's true. It reminds me of a of a graphic that I've seen of a of a gold digger, you know, with his pickaxe going through the mountain. And he's tunneled this really, really long tunnel. And then he just decides to give up And what he can't see because it's kind of like a slice of of the mountain, is that literally one foot more was just like this pot of gold. And, you know, it's a great graphic to kind of illustrate that. And it also reminds me of a quote that I heard Michael Jordan, who is the goat, don't care who out there is listening. Michael Jordan is the greatest of all time basketball player. And he's like, I'm so successful because I failed over and over and over and over again. And so when we relate that idea to retirement planning, it's like preparing for your future when you stop working and you need to live comfortably. And so what do you need in order to do that? Well, you need money.

Producer:
Hungry for something to chew on. Here's some meat on the bone.

Mike Zaino:
So some people start saving and investing for retirement while others might not even begin. Okay. Or they give up along the way. And so to kind of illustrate that, I've come up with two fictional characters. One we'll call Jane Who who didn't give up, and then the other one who just threw in the pickax, so to speak. We'll call John. Okay. And so, you know, John started saving for retirement when he was in his 30s. But after a few years, he faced some financial difficulties and they started to or decided, rather, to stop saving. And so he thought that it was too hard and that he would never have enough money. So he stopped contributing to his retirement account. And over time, John spent the money that he'd save, thinking that retirement was just too far off to even worry about today. Whereas Jane, who stayed the course, also started saving in her retirement and also faced some financial ups and downs. But Jane understood this week's quote and the wisdom behind it and realized that if she kept saving and investing, she might get closer to her retirement goals than she even thought was possible. So what she ended up doing was adjusting her savings strategy when necessary, but kept consistently contributing to her retirement accounts.

Mike Zaino:
And as she approached retirement age, she had a substantial nest egg which allowed her to retire comfortably. Okay. And so, you know, John, who gave up, found himself without much money saved for retirement, he had to rely on a very limited 401. K and kept working during his retirement years just to make ends meet, where Jane, again, who stayed the course, ended up having that comfortable retirement because she stuck with their plan and didn't give up. But she realized that she was actually much closer to her goal than she had initially thought. And so, you know, that lesson is, is just that in retirement planning, as in life, it is essential to stay committed to your goals even when things get tough. And many people who quit might not realize just how close they were to a secure retirement future. And it's a lesson in persistence and the importance of long term financial planning. You might actually be closer than you think to a secure retirement, and giving up prematurely can lead to financial struggles later on in life. So just remember Thomas Edison's quote, a person who with a thousand patents, trust me, he failed probably 10,000 times at least. Right. Remember that quote, Keep working towards your retirement goals even when it seems challenging.

Producer:
Yeah. I mean, don't don't give up no matter what happens, Right? It's, you know, it can seem challenging. It can seem far away. It can seem like this goal that you will never reach. But two things would encourage you to do. Number one is exactly what you just said, Mike, and that is to to stay the course and to really, you know, push through, stay committed to planning for your. Tournament. And number two is to work with someone who can help focus you on the goal and help you really realize and visualize what is possible and how it might be a heck of a lot closer than you thought. Think. Think. That's what that our friend there, John. Think that's what he needed?

Mike Zaino:
Yeah, I'll concur with that, but I think that's equally as important to doing it in the first place, because if you just decide to save, like I know a lot of people who are great savers, but they're horrible investors because they've never even tried it before, so they have all their money sitting in a savings account in the bank or in a safe in their closet. Okay. And what they're losing a lot of is purchasing power just due to the rising cost of living. So I think just as equally as important, as important as saving is consulting a financial professional that can at least lay out some groundwork for you and some actionable steps to take that will put you, you know, light years ahead of where you would have been without one.

Producer:
Yeah, absolutely right. And even if you think that you're on track, by the way, it's a good thing to do to work with a financial professional like Mike Zaino, have him take a look at your particular situation. We'll go through in just a little bit that process, like what that initial consultation is. It's absolutely free of any charge and any obligation. And Mike, I'll be glad to help you out and get you on the road to financial success.

Mike Zaino:
Yeah. So like I had a guy yesterday that I that I met with. I met with him and his wife and he had a very, very decent sized net worth. I mean, he was worth over $4 million and 3 million in investable assets. And he was with one of the wirehouses who had a plan. And he said that he needed X number of dollars to in order for him to live comfortably in retirement. And so when I looked at him, I'm like, okay, they're not considering, you know, what? If the market goes down, they're just protecting, you know, projecting an average 5% return. And I'm like, you know that because we've discussed this before. You know, if you lose 20%, you got to gain 25%. And heck, if you lose 50%, you got to gain 100% just to get back to even. And so he was like, hm. And I'm like, all right. So I re, you know, just ran some numbers for him and showed him a better plan that even using less than two thirds of his portfolio, we could actually half of his portfolio, we could accomplish his income need and still allow him to participate, you know, in other investable things. So a lot of times it's just getting a second set of eyes on your situation, even if you're comfortable with who you're with. Right. I'm not trying to take you away from anybody, but I might have a different perspective than one of the other advisors who is out in the, you know, working for the wirehouses, who's not really looking at your your account day in and day out, as you may think and hope he actually is.

Producer:
Yeah. Yeah, it's exactly true. I mean, a lot of times they can just be, you know, have have way too many clients that they're responsible for and everybody's kind of an account number to them and not really a name and not somebody that they that they get to know. And you know, when you work with Mike Zaino, you'll get to know the guy. And he's a great guy. So so there you go. 704 5601573 is the number to call 704560 1573. You can also go online to the website MoneyMattersWithMike.com.

Producer:
Come on down as we test your financial knowledge. In right or wrong?

Producer:
Yes. It is time once again for everybody's favorite financial game show where you don't really win a prize. You just get to be proud of yourself if you get them right. And that you know, that's true for me, too. I'll be surprised and proud if I get all of these right here. But you can guess right along with us. Folks, in right or wrong, this is the Social Security edition. And a lot of times, you know, Mike, we will hear from our listeners about Social Security. I know that you get a lot of questions about Social Security and because think would you agree that think a lot of people don't necessarily realize that there are as many decisions that go into your experience with Social Security. Then you then you might think, right, are a lot of decisions to be made?

Mike Zaino:
Yeah, people have absolutely no idea how many different combinations one can be subjected to as far as choices to make and trying to sift through all of those choices to figure out which one is the best for you. That's tough in most situations. So, you know, getting a professional set of eyes on that and really going through your individual situation will help determine the right path that you should take, because not everybody is the same. Some people actually should claim Social Security at the earliest available date and other people absolutely should, you know, delay taking Social Security. So, I mean, there's, again, many, many, many different combinations.

Producer:
Yeah, exactly. Especially when you're dealing with, you know, a situation with a spouse or something like that when to take. So we're going to go over some of that and and probably more here over these next few minutes as we play this edition of Right or Wrong. So feel free to take a guess, folks, at each one of these statements. I'm going to read the statement. Mike will tell us whether that statement is right or it is wrong. All right. Statement number one about Social Security. Under current Social Security law, full retirement age is 65, no matter when you were born. Is that right or is that wrong? Mike?

Mike Zaino:
Matt, that is wrong. Your year of birth is going to determine what your age of eligibility to start drawing Social Security benefits is. It used to be 65, right? And that's for people that were born in 1942 or before, but they changed the rules on us. And in fact, you know, they went to 66. If you were born between 1943 and 1954, and then if you were born, they changed the rules on us again from 1955 to 1959. They added two, four, six, 8 or 10 months. And then for everybody born in 1960 or later, the full retirement age for Social Security benefits in the United States has increased to 67.

Producer:
Yeah, so there you go. It is definitely not 65 anymore. They got to make it complicated for us and as difficult to understand as possible, especially for you poor folks born between 1955 and 59.

Mike Zaino:
No doubt.

Producer:
All right. So there we go. First one was wrong. Number two, we'll see if we can redeem ourselves here. In most cases, if I take benefits before my full retirement age, they will be reduced for early filing. Right or wrong, Mike?

Mike Zaino:
Matt. That is correct. You are absolutely right on that. And while you can start receiving benefits as early as age 62, if you make that choice, your benefit amount is going to be permanently reduced. And that reduction is based on the number of months you receive the benefit before reaching your full retirement age. And so the exact reduction will vary depending on your specific full retirement age, which is based again on your date of birth.

Producer:
And that of course we covered in our first clue our first statement. That was unfortunately wrong. But we, but we got the correct info from Mike that first answer. Well, number three here, if I have a spouse and he or she passes away, I will receive both my full benefit and my deceased spouse's full benefit. Is that right or is that wrong?

Mike Zaino:
Matt. Unfortunately, that is wrong. Okay. Social Security will continue to pay benefits to a surviving spouse after the deceased spouse has passed, but only the larger of the two benefit amounts will be continued to pay out. Okay. And so payments for the smaller benefit of the two are going to cease immediately after the death of the first spouse. And this perhaps is one of the biggest, um, flaws I see in a lot of people's income plans is that they're banking on Social Security from both partners. Okay. In a marriage relationship, right. To for that money to be there. Okay. But the fact of the matter is, is that when one of the spouses passes away, you're going to lose. The surviving spouse is going to lose somewhere between 33% and half of the money that they were receiving, especially if there was a, you know, similarity in how much you guys were actually bringing home as a couple.

Producer:
Yeah. And that's one of those things where it's makes, you know, the timing of when to take Social Security very important. It also is, you know, a very important just, you know, decision to defer the spouses, to talk about, communicate about and then communicate with a financial professional about as well, like a mr. Mike Zaino, for example. And that's who I, of course, would would recommend wholeheartedly. All right. So that one wrong. Number four, a statement in right or wrong, this time around, if I delay taking Social Security benefits past the age of 70, I will continue to get delayed retirement credit increases each year that I wait, is that right or is that wrong?

Mike Zaino:
Matt. Unfortunately, that is wrong. If only that were the case. Right. But your benefit will increase by approximately 8% for every single year that you delay claiming after your full retirement age. If you were born in 1943 or later, and waiting until you reach age 70 is going to yield maximum benefit, There's really no reason to wait beyond age 70 because unfortunately your benefits will not decrease any further. And I have sat down with a few folks. Unfortunately, they didn't know this and they were 72 and had not yet to start taking their benefits. And I'm like, You don't like free money? And they're like, What are you talking about? It's not getting any bigger. And unfortunately, you've lost two years worth of payments. Thank God they had a lot of longevity in their family history. And so there are people definitely live well into their 90s and actually had a couple centenarians as well. So hopefully they'll be able to recuperate just through longevity. Yes.

Producer:
Thanks to those good genes and those those long living genes that they're so blessed with there. And. All right. Number five, the last one in this edition of Right or Wrong, this special Social Security edition of our game is based on the government's most recent calculations. Social Security benefits could be reduced by 23%, maybe even more for everyone by the year 2033. Is that right or is that wrong?

Mike Zaino:
Matt. And unfortunately, that is right. Okay. And whoever wins the 2024 presidential election, that person is going to face a Social Security trust fund rapidly approaching insolvency. In fact, the program's trustees are projecting that the old Age and Survivors Insurance Trust Fund, which is OAS I if you look at your pay stub and you're wondering what the heck is that being deducted? That's what it is. It will deplete its reserves by the year 2023, which means that today's 57 year olds, that's when they're going to reach their normal retirement age. And today's youngest retirees are going to turn 72 years of age. And so think about this for a second, Matt. For a typical dual income couple who retires in 2033, we estimate that that is going to represent an immediate, you know, $17,400 cut in current dollar annual benefits. And then for single folks out there, $13,100 cut for a single typical income couple or income person at that point in time.

Producer:
Yeah, it's definitely a huge, huge hit to the pocketbook, to the wallet, if that were to happen. Hopefully. Of course, as we say, whenever we have discussions about this, hopefully they'll actually come up with some sort of solution to things. And, you know, things may have to change, but hopefully not that big of a cut because, you know, $17,400, that's a lifestyle change for a lot of folks right there.

Mike Zaino:
Yeah, I mean, think about it. If you're if you're not even making $100, that's almost $100,000. Rather, that's almost 20% of your income gone. Yeah. So, yeah, that that could definitely cause a lot of people eating beanie weenies and, you know, fried spam. Yeah. There's anything wrong with beanie weenies and fried spam, but I'd much prefer a filet mignon.

Producer:
That's, that's right. Comparatively speaking, the filet mignon would get my vote as well. Although fried spam, it has its place. It has its place in a diet. Well, maybe not in a diet, but in, you know. You know what I mean? So the Social Security Administration actually did a study on this not all that long ago, Mike, and said that we got this from TSA.gov, which is the Social Security Administration's website, that based on the best estimates that they have, the hospital insurance trust fund, which is basically it's Medicare Part A, right that hospital coverage from Medicare Part A, we'll be able to pay 100% of total scheduled benefits until 2031. And that's actually three years later than reported last year. So that's good that, you know, that's a little bit longer than they originally thought would be available. The funds will be available to pay 100% of the benefits there through Medicare Part A, but then the funds reserves will be depleted in the year 2031 and continuing program income will be sufficient to pay just 89% of total scheduled benefits. So the cut there.

Mike Zaino:
Yeah, and a lot of people don't realize who aren't of Medicare age yet or even Social Security age yet that you actually file for Medicare through the Social Security office so that it can be deducted from your Social Security payments. And so we're talking about Medicare Part A, which is the hospital insurance. So the fact that even in 2031, it's only going to be able to meet 89% of its total scheduled benefits might be a little scary for those who are not yet going to be eligible to start Medicare by 2031. And so those folks must have a health plan that is contingent or non-contingent, I should say, upon whatever they do with with the Medicare Part A.

Producer:
That's that's very true. Yeah. Because, you know, you, as we often say, don't rely solely on something else on someone else, another entity to provide for you. You got to have a plan that includes the what ifs in life. And that's, you know, a definite what if there. And also that tsa.gov study showed that the old age survivors insurance trust fund, which was oaci, as you mentioned a moment ago, Mike, it'll be able to pay 100% of the scheduled benefits until 2033. As we said, that, though, is not any any later than they originally predicted. That's actually a year earlier than they reported last year. And after that, just 77% of scheduled benefits will be able to be paid out. So not good news on either front.

Mike Zaino:
It's not good news. And unfortunately, that year keeps getting backed up because remember, when it was 20, 36, before it was 20, 34 and now it's 2033. So there's no secret that when Social Security was first instituted, you were supposed to have been dead for. For four years because the average or the average life expectancy was 58 and you could not claim until you were 62. Well, now you have people living and claiming at 62 all the way up through 70 and living well into their 80s, 90s and beyond. And so it just wasn't designed for that, that type of longevity. So, you know people out there and listen to land correctly choosing when to take your Social Security benefits. That's perhaps one of the most important decisions that you can make when retirement planning and you only have one chance to get it right. So let us help you consider all of your options With our free Social Security maximization report, we believe that you deserve to get back what you have worked so hard for and paid into all of your life, and to take advantage of that free offer just for our listeners, give me a call. (704) 560-1573 or go to MoneyMattersWithMike.com and schedule your complimentary retirement consultation.

Producer:
Absolutely a great thing for you to do and give yourself some peace of mind no matter what happens down down the road. Well speaking of peace of mind, Mike, this next part of the show is it's kind of about the opposite of that. It's about being too emotional and avoiding being too emotional when it comes to your investing and exactly why people need to do that. It becomes really evident when you take a look at some some very interesting numbers that we found here, Mike.

Mike Zaino:
There are definitely interesting. And and the thing that I think most people tend to do when it comes to money and when it comes to the economy and when it comes to the markets is they react. They do not respond. Right. They react. And when you compare the two, typically, if you have a reaction to something that has a negative connotation, whereas if you respond to something that's good news, right? Well, we believe investors are best served by allocating their long term investment assets to a globally diversified portfolio that is consistent with their risk profile and then maintain solid discipline to allow the markets to work over time. And so, you know, we kind of looked at the difference of just a $100,000 portfolio over the span of 20 years, the last 20 years. And Matt, those numbers that we found were absolutely staggering. If somebody stayed invested over that entire 20 year period, didn't freak out, just stayed the course, then they wound up with a little over $600,000, actually, $636,545. But get this, if they kind of panicked and moved to safety just for a little bit of time, if they only missed the best five days, that's one, two, three, four, five, five days out of 20 years instead of 636 grand, it dropped all the way down to 392,000.

Mike Zaino:
So they lost literally a third of what they could have had. They just stayed the course. If they missed the ten best days that dropped all the way down to 288,000 and change. And if they missed the 25 best days, now we're talking about over 20 years, right? We're not talking about over, you know, a month or over a quarter or over a year or even a decade. We're talking about two decades. So instead of 636,000 and change, if you missed the best 25 days of the past 20 years, that dropped all the way down to $142,906. That, folks, is why you want to stay the course provided you have time. Okay. If you don't have time before you, you know, decide to retire and cross that threshold, then you need to be smarter with your risks. Okay? You cannot afford to take as much risk when you're knocking on retirement's door as you could when you were even 40 or 50 years of age. So always keep that in mind. You don't want to miss the best five days over 20 years, let alone the best 25 days over 20 years.

Producer:
That's just staggering, really, when you take a look at those numbers and and listen to them and think about them, it's really something that just that many days missed out on. And that is it really does emphasize staying the course is the best plan over a long period of time. And so, you know, avoiding emotional investing truly essential here. So we got actually five strategies that. We want to mention, too, to help you out as our listeners, to manage those emotions, too. You know, we're human beings. We have emotions. That's just that's kind of our thing. And they can get in the way a lot of the time of the best decisions, as Mike just illustrated. But Mike, we've got these these tips for managing emotions, becoming a wiser investor and then, you know, using that wisdom, putting that wisdom to use instead of reacting based on emotions. So number one, and I think this is a great place to start, is to set realistic expectations.

Mike Zaino:
Yeah. And I think people might ask themselves, well, what is realistic? Well, if you expect never to experience a downturn in the market, that's not realistic. That is unrealistic. If you expect to get 20% annual gains year in and year out in the market. That's not realistic either. So you need to understand that the stock market goes through UPS and it goes through downs. And so you need to prepare yourself for gains, which is easy to prepare for, but you need to also emotionally prepare yourself to lose some money and avoid setting those unrealistic short term expectations that may lead to impulsive decisions based on sudden emotional change.

Producer:
Yeah, definitely not a good thing. And number two is another solid place to build to start building that foundation for a better financial future, and that is to establish a solid financial plan.

Mike Zaino:
Yes. Okay. Having a clear roadmap on how to get from point A to point B can help you make rational decisions instead of reacting emotionally to market fluctuations. So you need to start by either forming one yourself or speaking with a financial professional that helps you create a well thought out financial plan that aligns with both your goals and objectives, as well as your appetite for risk. Okay. The good news is that we can help you with that.

Producer:
Absolutely. And that's another great place to mention. You can go to the website MoneyMattersWithMike.com for that free consultation. 704 560 1573 is the number as well. Another area here that we want to discuss about, you know, managing your your emotions, becoming wiser as an investor is to make sure that you are diversified. You have a diverse portfolio.

Mike Zaino:
So, you know, and once again, you don't want to have all your eggs in one basket, especially if those eggs have the ability to crack. Okay? So by spreading your investments across different asset classes and that's the important distinction because you may have a bunch of stock and you have stock in this company, that company, that company and that company. But that's all stock. And you may think that that's diversified, but it's not because it's one asset class. So you want to make sure that you have stocks, You want to make sure that you have annuities, you want to make sure that you have real estate. You want to make sure that you have alternative assets, other things that will help you reduce risk, because hopefully as one sector underperforms, the others are at least maintaining or overperforming. And that diversification can help cushion the impact of market volatility and minimize emotional reactions to individual investment performance.

Producer:
Another one, Mike, here that we talk about quite a bit because it's what you're so passionate about. It's what I have now, after having worked with you for over a year on this show, have become passionate about as well, is to really help people stay informed and stay educated. That is the point of the show and that is this next point that will help you maintain your maintain your cool guess and, you know, avoid the emotional investing.

Mike Zaino:
Yeah. So we've all heard the statement that knowledge is power and I've disagreed with that statement as it stands by itself. Right? If you do nothing with that information, with that knowledge, all you are is an educated derelict. You're you're pardon my French, but you're an idiot because you're not doing anything with the knowledge. So as long as you put it into practical application, that knowledge becomes a powerful tool and helps you avoid emotional investing. So we're here on the air every single week to help local listeners as well as listeners all over the globe who are listening via podcast. Stay informed with the latest facts and information. So every single day I'm combing what's going on in the financial world to see if any of it really matters. And I have to be able to sift through the BS because trust me, there's a lot of that out there and bring to our listeners relative information that is ultimately going to help you prepare for retirement a lot better and simply learning more about. Your future retirement can help build confidence and reduce fear and uncertainty and doubt. We call that FUD. If you fear, uncertainty and doubt, that often leads to those emotional decisions.

Producer:
Fired. I like that. It's like, well, it's kind of like Elmer Fudd, but then it's, you know, it's also sort of a new a new word that I've learned today. And it's technically an acronym. I know. But, you know, it's a new word as well. Um, all right. So then the last one, Mike, that we have here to avoid that emotional investing is to implement automatic investing. And rebalancing is one of those things that, you know, I love automation in this particular way because it's, it's the good kind. It can, you know, if you have funds that are set to go into whatever your retirement plan is on a regular basis, I think that's a great thing because then you don't even have to take any action on it. It's automatically happening in the background and you then just get to reap the benefits of it down the road.

Mike Zaino:
Yeah, it what it does, Matt, is, is it reduces the need for frequent decision making because it's kind of out of sight, out of mind. But where people get themselves in trouble is if they just set it and forget it and each time they get a pay raise, they take it home and elevate their lifestyle. I would challenge our listeners to if you do get a pay raise, increase your 401 seconds, increase your spouse. If you're a federal employee, increase your 403 B's. And if you're fortunate enough to have maxed out your contributions, then start an IRA. Right? There's always a way to save more for retirement. And, you know, it's never a bad idea to save more. And so implementing a rebalancing strategy that ensures your portfolio stays in line with those long term goals without emotional interference will definitely help you maintain that discipline that you have. It's a much more disciplined approach to investing, and it'll help you keep the train on track, heading in the right direction.

Producer:
That's always a good thing. And you know, we talked about to start off this little section with our strategies for for managing emotions and becoming a wiser investor about setting realistic expectations and understanding that the market goes through ups and downs. Right. But there's often, you know, if you talk about like the cyclical nature of the economy and the markets, you know, there's there are the ups, there are the peaks, there are the downs, there are the valleys. And then the cycle repeats itself. The human emotions are kind of the same thing. But those two things never really necessarily line up the right way, as evidenced by those numbers that we shared earlier, where if you missed 25 best days in the stock market, you were going to, you know, be bear crying.

Mike Zaino:
Basically crying over 20.

Producer:
Years. Exactly. I mean, just just barely getting any return whatsoever.

Mike Zaino:
Exactly. And this was illustrated that thought with a little little graph that I know our listeners can't see. Okay. But you could definitely understand that, you know, when you first start investing, you're optimistic. And then that turned that optimism turns into excitement when the markets are going up and thrill almost in euphoria when it keeps going up. But then as the markets start to go down, you go into denial and then they fall a little bit further and you start getting anxious about, all right, what am I doing? What's going on? And if they drop even further now, you're afraid. You're fearful of what's going on. If it keeps dropping, that can force you into a depression, into a panic, and ultimately into just despondency before when it starts to pull back up again. All right. Now you're skeptical. Is this going to last? And then it keeps going up a little bit and now you're all of a sudden hopeful again and then it kind of gets back up to where you started and now you're relieved. Okay. And then it keeps climbing back to the optimism. It's so it's that cyclical nature. And I just love the way that this chart kind of shows that to most people, because at the height of euphoria, okay, that actually is your point of maximum financial risk because you think it's going to last forever. And then at the lowest point, the bottom when you're just, you know, in a state of despondency, that's actually your point of maximum financial opportunity because that's the time to buy and add more soldiers to your army so that when it storms up that hill, you're storming that much faster.

Producer:
Yeah, absolutely right. It's sort of, you know, very counterintuitive as to, you know, compared to what we would normally think, because when we're all euphoric, we're like, everything's great, everything's going wonderful. And then all of a sudden the bottom drops out. And and you wouldn't think that that's going to be your riskiest time because you're feeling great and you know about what all is going on. And then you're down in the depths of that despair and you're not thinking, oh, well, things are going to be wonderful. No, you're thinking things are going to stay where they are. But you got to understand, nothing stays where it is. Things change all the time. And that's that's the one constant right in life is, is change.

Mike Zaino:
It's change. And if you if you can learn how to, you know, sell high and buy low, then you'll be a successful investor. But those who can't learn that trait. Then what do you do? You just stay the course.

Producer:
Yeah. And that's the vast majority of. Of people right there. Unless you have your crystal ball. And like we always say, ours is in the shop. And and our listeners, by the way, Mike, we've mentioned this a couple of times. I think it's time to sort of dive into it a little bit here. Our listeners are entitled to a complimentary no obligation consultation so that, you know, you can become like we were just talking about educated, empowered as well to take control of your financial future. You can meet with Mike privately to learn more about strategies to improve your retirement savings plan overall. And you know what? We don't we don't want our listeners to say this. Well, you know, I just wish I had known no, then that shouldn't be in your vocabulary at all, because Mike is going to dive into the details with you, help you make confident decisions about your retirement as well. Talk a bit, Mike, about this process, about what that free consultation looks like, right?

Mike Zaino:
So number one, we provide the comprehensive consultations at zero cost for our listeners and there's also zero obligation. Okay. You'll only work with us if it makes sense for you. Okay. So what I do is the first call. It's a discovery call. We'll just kind of get to know each other. We may even meet at a Starbucks or, you know, at a restaurant for lunch or, you know, at my office or virtually on Zoom or FaceTime, whatever you feel comfortable with. It's just where we get to know each other, right? And then if we decide to go a little bit deeper, we do just that. We go pretty deep and we're going to help analyze your financial situation. So examine your entire set of expenses as well as what income you have coming in. We'll discover exactly how much you're paying in fees with your investment portfolio. We help you cut unnecessary costs, especially when they're in retirement plans like IRAs or 401. S or any other types of retirement savings accounts. If you have any annuities, you might have a variable annuity. Well, in downturns. Okay, variable annuities, guess what? They lose value in retirement. That is definitely not something I want any retiree or even pre-retiree holding just for the propensity that it may go down. It's tied to market performance, so we can help with that. We can also help you with Social Security and Medicare planning, right? Maximize those Social Security benefits and get everything you possibly can out of all four parts of Medicare. Bottom line is, is that we help you compare your current situation to what's actually possible if you work with us. Like I said mentioned earlier on this show, I showed a gentleman how he could use half of his portfolio and yield the same results that another major wirehouse was telling him it was going to take his entire portfolio to accomplish. And I always remember that it is your money. Don't take that lightly. And if it matters to you, it matters to me.

Producer:
And if you want to find out more and get that free full retirement plan consultation, go online to MoneyMattersWithMike.com, it's all one word.com. And then you can also give Mike a call if that's your preferred method of communication. 704 560 1573 (704) 560-1573.

Producer:
Here's the cost cutter of the week.

Producer:
Well we love saving our listeners some money around here. And here is another way to do it in this week's Cost. Cutter You know, Mike, there are some some bad banking habits out there that could very well be eating away at people's hard earned money. And the Consumer Financial Protection Bureau actually said that from 2019 to 2020, this was, you know, kind of a shocker to me. Americans spent almost $28 billion just in banking fees, just in the fees alone. So that's just that's wow. Yeah.

Mike Zaino:
Is right. And that's that's billion with a B, right.

Producer:
Yeah exactly. 28 billion with a B.

Mike Zaino:
Yeah. That's a lot. That's a lot of money.

Producer:
In anybody's book. I'm pretty much think that is a that is a lot of money and so there are some common banking practices that you need to get rid of. You need to ditch to save yourself some money. And the first one, I think, is the one that kind of sneaks up on us quite a bit. And it's those darn ATM fees. Yeah.

Mike Zaino:
And this this one, this one amazes me because I know people and I know a lot of people actually that that take cash out of ATMs literally every single week or multiple times a week. But here's the thing. If you use a bank other than your own, you might incur an ATM fee. And on average, those fees are about $3 per transaction. So if you're withdrawing money. Once a week, it could cost you $150 or more each and every single year. And you may think, well, it's only 150 bucks on an annual basis. That's not a lot. Well, yes, it is, especially over time when you consider that money could be working for you instead of paying, you know, a bank owner or an ATM owner. And according to the Cfpb, which again, is the Consumer Financial Protection Bureau, the absolute best way to avoid those fees is by using ATMs that are owned by your bank. And another option is just to contact your bank and see if they'll rebate those fees that are charged at ATMs from third party cash vendors.

Producer:
Yeah, and that does happen on on occasion. I know that my particular bank will do that. And my understanding is it's based on, you know, if they have a relationship with a particular bank or a network of of banks or ATM machines. But I've seen that on my statement before, the reimbursement of ATM fees. Right.

Mike Zaino:
And here's the caveat. If you don't ask, they're not going to volunteer.

Producer:
You got and and you're not going to ever know. Like that's the thing is if you don't ask, you can't know. So at least ask. And then, hey, you'll know one way or the other. If your only option absolute.

Mike Zaino:
Your own advocate.

Producer:
100%. Well, another one here is paying overdraft and non-sufficient funds fees. These are these are never good things.

Mike Zaino:
No, they're not. And we understand that. You know, look, sometimes life gets in the way and you might have some deposits and withdrawals kind of cross over each other, especially around holiday weekends. But if you've opted into your bank's overdraft protection, you'll be able to continue to make purchases with your debit card even without sufficient funds. But know this, even if you do have that protection, your bank may not allow it to be used when writing checks or when using automatic bill pay. So if you don't have the overdraft protection, your bank may decline your purchase and all of those scenarios, you still can be charged a fee, either an overdraft fee or a non-sufficient funds fee, which shows up as NSF. And so both of those are going to run on average $34 per transaction. And the best way to avoid those is to just budget properly keep more cash in your operating account than you actually need. You don't have to go hog wild because you do want your money working for you, but make sure that you have a buffer so that you have enough in there and never let your accounts drop to an amount that you consider unsafe or that threshold that might dip into causing an overdraft or an NSF fee. Yeah.

Producer:
And there's actually there banks will provide some tools on occasion as well. They'll give you an alert if your bank statement or if your bank balance, whether your account balance falls below that particular threshold, you can get an alert for that. And so you'll know ahead of time if you're in danger of of getting overdrawn. And speaking of those types of accounts, checking accounts in particular, keeping too much money, too much cash in those checking accounts, that could be something that'll cost you in the long run.

Mike Zaino:
Right. So it is natural to want to hold on to money in your checking account. But the truth is you're selling yourself short from a financial standpoint because money in your checking account isn't accruing much, if any, interest over time. And it's best only to keep the money that you need for your monthly expenses in your checking account just mentioned that's your operating capital. So if you've got, you know, $2,500 a month in bills, you may want to keep about $3,000 a month in your account, maybe even $3,500 a month, just to account for any emergency that comes up. So you don't have to tap into other sources. Right. But, you know, it's best, like I said, to only keep the money that you need to pay your bills in a checking account. And so everything else should be put to work for you.

Producer:
Yeah, that's right. Put put that hard earned money to work for you and it'll work hard for you if you put it in the right place. Not tracking your spending. This one goes back to those those blessed overdraft fees and NSF fees you were talking about.

Mike Zaino:
Yeah, I think this is you know, we talk about this a lot on this show several times a year. And I think it's important for people to understand where their money is going, because if somebody shows me their credit card statement, their bank statement, I can tell you what their priorities are just by where they place their money. And the quickest way to incur NSF fees or overdrafts is spending more than you can actually afford. And the easiest way to prevent those unwanted fees is to know where every single penny is. Going. And gone are the days where you actually needed a checkbook to balance your checks. Your credits and debits by hand. Okay. You can use a financial tracking app or you can even track your spending on the banks app itself. So look out for those automatically renewing subscriptions and other services that you might have forgotten about because they have a sneaky way of adding up and causing your NSF and overdraft fees. So, you know, a good idea, I should say, for every single one of our listeners is for a 90 day period. I challenge you to do this for 90 days, track down where every single penny goes. And I bet you're shocked at the outcome.

Producer:
Yeah, you probably will be very, very shocked. Oh, didn't know that was happening. Well, now you do. If you've tracked yourself for 90 days and the final tip here or not really tip, but the final pitfall that you could be finding yourself in is staying with the wrong bank.

Mike Zaino:
Okay? There is absolutely zero reason to stay with a bank that isn't working for you. And whether there aren't enough branches that are in your vicinity or you're being charged maintenance fees for this account or that account, staying loyal is not worth your time, and it's definitely not worth your money. Banks compete against each other. Take the time to shop around and see which bank or maybe even credit union meets. Your needs can save you on fees and then actually make the switch. Okay. Don't be scared to change. That's where people, you know, fall into that that that trap of staying at the same bank when the bank right around the corner or just down the street would be able to do a lot better for you.

Producer:
Yeah. That's why your loyalty just because you've always been with this bank doesn't necessarily mean that bank is right for you. And if anything that we have shared on this week's show makes sense to you folks. And you could use some help with a free no obligation retirement consultation. Don't hesitate to give Mike Zaino a call. He really does this show each and every week to bring important information, like all the things we've talked about to people just like you and loves meeting and talking with the listeners of the show. MoneyMattersWithMike.com is the website. The number 704 5601573. It's this week in history. Well, the Beach Boys released a big single on September 16th of 1963. As we kick off this Week in History. It was surfer girl. It peaked at number seven on the Billboard Top 100 in the US. And boy, I'll tell you, they had so many hits over their career.

Mike Zaino:
They did have a run for sure. I was never a huge Beach Boys fan, to be honest with you. But, you know, they had their their time for sure.

Producer:
Absolutely. September 17th, big day in sports. The NFL, the National Football League, born on this day in 1920 in Canton, Ohio, which is why the NFL Hall of Fame is in Canton, Ohio, which may seem like a very random place, but that's where the league was born. And get this, 12 teams had to pay $100 each to join the league. Wow.

Mike Zaino:
$100 each. Now, unlike being a Beach Boys fan, I am an NFL fan. I am a football fan. And in fact, to me, there are two seasons. There is football season and what I call mourning season. I literally go into mourning when there's no football. But today, the NFL remains one of the most popular sports in the entire world, and it draws an average of 17.1 million viewers across television and digital platforms.

Producer:
Wow, That just crazy, crazy stuff there. My how times have changed since that $100 entry fee. Well, also a little pop culture thing that happened 1972 On September 17th, the hit TV show Mash made its debut on CBS television. I think one of the the best finales and still, I think the most watched finale in TV history.

Mike Zaino:
Yeah, I mean, that show remains one of the most highly rated television shows of all time. And I did enjoy, you know, I served in the military and I know a lot of our listeners did, too. And we always like, you know, watching reruns of Mash for sure.

Producer:
Yeah, definitely. And then finally, on September 18th, 1947, President Truman officially created the CIA. And it's, of course, been around for a very long time now, since 1947. All righty, sir. Well, that is going to just about do it for this edition of the show. But thank you, as always, for bringing your knowledge and your passion for all of this to our listeners. And we'll talk at you again next time.

Mike Zaino:
Matt, thank you so much for, you know, each and every single week you bring so much value to the show. And you know, most importantly, thank you to all of our listeners out there. And if you know anybody that could benefit from any of the information that we put out on the airwaves each and every single week, or if you want to learn about something else that maybe we haven't discussed in a while, just reach out, message us. Okay? Share our show with people like our show on YouTube, like it on Facebook. Whatever you're doing this weekend, I hope you do it to its fullest extent. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573.

Producer:
Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

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